Boris Johnson’s funny money

With a year to go to the London Mayor and London Assembly elections a strange debate is underway about the huge part of London loosely described as “outer London”.

Remember the last election? One of the strongest attacks on Ken Livingstone was that he was just a “Zone One Mayor”. He was accused of having visited Havana more times than the London Borough of Havering. Three years on and the London Labour Party have decided that no speech, press release, letter or comment can go out without the words “outer London” repeated ad nauseam.

Zone one mayor
The debate is becoming surreal. Whatever his rhetoric, Boris Johnson is turning into just as much a Zone One Mayor as Ken Livingstone. His flagship bike hire scheme is restricted to.… yes, central London. Elected promising it would by funded solely from sponsorship, actually Transport for London is spending £140 million over 5 years. His latest wheeze – a cable car across the Thames – is already costing Transport for London £52 million despite a similar promise.

Meanwhile the promised orbital bus network for outer London has turned out to be just one long standing route with increased frequency. Even that comes at the same time as Boris Johnson has abolished Zone 2 to 6 travelcards, used to get around the suburbs, forcing fare rises on some outer Londoners as high as 74%.

Conscious no doubt of this record, the Mayor has announced a brand new initiative, that of the Outer London Fund worth £50m. Already the boroughs are lining up their applications. His announcement suggested he had secured funding from central government for the regeneration fund. Indeed he declared in his press release that “After months of tough negotiations with government, this key fund will revitalise projects or get new schemes off the ground at exactly the right time for communities concerned about the future.”

Hmmm. Sounds too good to be true? Unfortunately, yes. My research has revealed that in reality the Mayor has actually authorised £40m of borrowing to pay for the Outer London Fund. So the ultimate cost to taxpayers of this pre-election boondoggle will be massively higher.

Funny money
The true cost of the scheme turns out to more than one third greater than the Mayor has so far admitted, with the real cost rising to nearly £70 million (£18m interest, on top of repaying £40 million, plus the £10m from taxpayers, based on the Greater London Authority’s prudential borrowing cost of 6% interest, with repayment over 15 years).

There is of course a strong case for investing in regeneration projects from borrowing, if they boost economic growth and create a surplus that can help finance the repayment and the interest cost. However my questioning of the Mayor reveals no such thinking and no intention to ask the boroughs to contribute back to the fund.

Vision for a liveable London
Truth is, we do need a big boost to outer London, which is suffering escalating housing costs, growing unemployment and increased congestion, just like the rest of London. The mayor’s Outer London Commission has sunk without trace, having failed to get consensus on how to encourage growth while preserving what makes the suburbs great places to live and work. In short, we need a new Mayor with a fresh vision for a liveable London.

Meanwhile we have a Mayor who has made a ‘glitzy’ announcement in the run up to an election, hoping that no one will realise he is passing on the costs to London taxpayers for years to come.

Borrowing without regard to the long term cost? Isn’t that just the mess the last Labour government got us into?

Mike Tuffrey is the Liberal Democrat London Assembly spokesperson for finance and deputy chair of the London Assembly budget committee. Mike grew up in the outer London borough of Bromley before moving to Lambeth where he cut his political teeth fighting Ken Livingstone on the GLC.

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